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Nightmares in Business

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Everyone likes to tell you about their winning business ideas or spectacular deals however the reality is that every great business person has had their fair share of business nightmares. Anyone that says they haven’t is deluded.

Let’s face it you are going to make mistakes, bad deals and underestimate costs and other factors. So let me share a few business nightmares and hopefully you can learn from these and how you can turn a trick into a treat…

Many of my nightmares especially in the early days came from saying “YES” too much. In business we want to keep customers happy however making promises that you cannot deliver is a great way to lose your customers. When I was younger and over-keen to grab business, whether you were looking for an elephant tomorrow or a new jumbo jet, I would have likely said yes no problem. So we need to manage expectations – if you think a task will take 3 days, its far better to say 5 and deliver in 4 days.

Also know your limits. If you’re already flat out, taking on another client on is not wise. I understand you don’t want to turn business away, but could you delay the start date? Could you outsource some of your tasks which would free up more time? So here is a look at my business nightmares:

Supply chain issues

Back in the days when I was selling the old brick phones (Motorola 8500x) stock was very erratic, but of course being the new kid I kept taking orders, but the problem was I could not find stock and the more orders I took the more money I lost as I was having to cover the orders via other dealers. The moral of the story is that sometimes it’s better to say no or at least offer alternatives and be honest about supply issues. It’s a fact that some businesses have gone broke after taking on a large order that they cannot service.

Signing contracts you don’t understand

Back in an earlier business I had a partner.  I have always been the scrimp and saver where he was a great salesman and had to have the image, so I ended up signing up a personal guarantee on a car, even though I did not realise it was a personal guarantee.  As you can guess, that partner soon disappeared and I was left with a car which had depreciated like a stone and a financing agreement which I had to honour to keep my credit rating. I have not made that mistake again. If you ever need to sign any type of agreement do double check what your personal liability is, if terms are very onerous then don’t sign. Always understand the worst case scenarios and what the get out clause will cost. Never be afraid to ask a stupid question.

Hiring the wrong people and not double checking

Over the years I have learnt a CV means nothing and whilst today with the internet it’s far easier to do background checks, I strongly advise if recruiting is not your strong point then get some outside help. Whilst we want to look for the best in people, many will try and take advantage of you. Keep employment contracts flexible especially at the start, if you can build in a 12 month probation period then do so. When recruiting it’s all about getting the right person for the job not necessarily someone that has the same skills you already have. Some people just don’t come across well in an interview so offer a chance for them to come in and spend a day or two to get a better feel.

The wrong key staff will kill your business, today where ever possible, I outsource and have no long term fixed contacts.

Going in too low and offering special one-off deals

The mistake many new businesses make is thinking they are new they have to undercut or offer a better deal, fortunately I only made this mistake a few times and soon realised you can always negotiate a price down, but you can never go back and charge more. You always need to be careful with offering special one – off deals and really think out the longer term implications. After offering a client a deal it is very hard to get the client to go back to the normal rate. Where possible offer bonus items rather than lower prices i.e. buy this phone and I will included insurance and an extra battery is better than just going for a lower price as those extras normally don’t cost you as much.

A final few words of wisdom on my business nightmares…

If I think back to what I would do differently when considering my business mistakes, that would be “take the loss quicker” and admit the problem quicker. By nature most entrepreneurs are optimistic and we don’t want to admit a problem or we have made a mistake, however sometimes you just have to face up to it and factors out of your control will happen but it’s how you manage those that will make the difference.

Words by Vince Stanzione, a self-made multi-millionaire entrepreneur, investor and New York Times Bestselling author of The Millionaire Dropout, Fire Your Boss, Do What You Love and Reclaim Your Life. For more information on his latest book, you can visit www.themillionairedropout.com

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